We’ve reported quite a bit on THQ’s financial woes since the company was notified of possible delisting by NASDAQ in late January. With a little over a month left before the company must evidence 10 consecutive days of trading at $1.00 or higher, there have been some big shifts at the company. Danny Bilson, now former Executive Vice President for Core Games (who we interviewed back in March) has left the company. The new president, Jason Rubin, co-founder of Naughty Dog has his hands full and just a week in has been at the center of some controversy.

During EA’s press conference at the show, it was announced that the UFC license had been transferred from THQ. This means no more Undisputed titles (which is a shame), but also heralded mass layoffs at the company’s San Diego studio. The timing is especially unfortunate since E3 is typically given the reverence of a holy event in the industry. It’s hard to enjoy the Christmas-like feeling of new game announcements when you’ve just been laid off.

Additionally, there is some confusion surrounding Rubin’s position on the Saints Rowfranchise after an interview with Polygon. When the initial interview ran, the quote that led the piece made it seem that the new company president was embarrassed of Saints Row: The Third. A clarification seems to indicate that is not the case, but why apologize to anyone for the game that, according to the most recent SEC financial filing is one of two titles saving the corporation (the other being WWE ’12)? Especially with an expansion coming later this fall (Enter the Dominatrix) equivocating on the company’s most popular and successful franchise seems an ill-advised move. Sure, it’s not going to be for everyone, and I wouldn’t play it in front of my children either, but it managed to do the one thing that so many games fail at. It was unabashed fun, and it recaptured the joy of playing games that so many titles seem to forego.

In the 10-K financial filing required by the SEC of all companies at the end of the fiscal year, the company details some obvious, but still alarming facts. First, management cannot guarantee that net sales will grow in the future. There is no room for PR posturing in these documents, and it’s the first glimpse we’re getting of the hard reality of THQ’s position. Additionally, the states what we all know to be true.

Our business is “hit” driven. If we do not deliver “hit” games, our net sales, operating results and cash flows could suffer.

What is remarkable about this is how it is a direct juxtaposition to what THQ told us in our interview. We were told that Darksiders II, which had not been officially delayed at that point, had nothing to do with how the company was dealing with NASDAQ or the stock prices. While this could be technically true if the company was already putting the wheels in motion for a reverse stock split, the implication was that shipping marquee games didn’t have a direct impact on stock prices. A reverse stock split (1:15) saved the company in 1995 when stocks were trading at $.25. Currently up for consideration are 1:3, 1:5, 1:10 reverse splits. This means that for every three, five or ten shares owned, only one will be given. Reverse stock splits are never considered a good thing, but posed with that choice or delisting, it’s unlikely that investors will choose the latter.

The 10-K filing also mentions that a number of titles feel short of their goals and would be discontinued. We already knew about Red Faction: Armageddon causing a screeching halt to the franchise, but it appears that Warhammer 40,000: Space Marine(which ended on a cliffhanger) and MX vs ATV are on the chopping block. Given the poor performance (relatively) of Space Marine, one has to be concerned about the fate of the not-MMO, Warhammer 40,000: Dark Millennium. Of course, that game’s launch in early September 2011 didn’t help matters, going toe to toe with established franchises at the busiest time of year.

Additionally, the document states that,

We believe we have adequate resources to execute on our product plan and deliver our multi-year pipeline of games; however, there can be no assurance that we will be able to do so without additional capital. In the event our future net sales or required expenditures differ from our expectations for any reason, and our external liquidity sources, including our credit facility and vendor credit terms, are not sufficient to meet our operating requirements, we may need to defer and/or curtail currently-planned expenditures, cancel projects currently in development, and/or pursue additional funding or additional external sources of liquidity, which may not be available on financially attractive terms, if at all, to meet our cash needs.

Again, this document is a laundry list of the worst-case scenarios (catastrophic events and geopolitical turmoil are also included), but it’s a very real possibility that THQ may find itself in a position where cancelations are necessary. It’s a nasty death spiral that is nearly impossible to pull out of should that happen.

There is a new wrinkle, also, Crytek recently announced that after Crysis 3, they will be making only free-to-play games. At the same time, they are working with THQ to create a sequel to the underwhelming Homefront. These two facts seem to be at odds with one another, unless THQ is branching into the freemium market, which is unlikely. Of course, that game was absent from E3 (as was Enter the Dominatrix, despite it’s supposed fall 2012 release), South Park: The Stick of Truthwas nothing more than a trailer (despite Bilson’s indication during the interview that much more had been completed) and WWE ’13 was nowhere to be found. Darksiders II is the next game expected from the publisher, launching in August, with Company of Heroes 2and Metro: Last Light(the other two games shown behind closed doors) slated for 2013.

It’s not the end for THQ yet, but things don’t look good. On June 29, investors will vote on the reverse stock split. Should it pass, the publisher only need keep the price up for 10 days to get in the clear with NASDAQ. From there, it’s up to them to prove that they didn’t just prolong the inevitable.